In an era where technology is continuing to migrate consumer spending habits online and away from brick-and-mortar stores, the 2019 Third-Party Logistics Study highlights how supply chains are also going digital and using science to keep pace.
The study, created and supported by Infosys Consulting, Atlanta; Penn State University, State College, Pa.; Penske Logistics, Bloomfield Hills, Mich.; and Korn Ferry, Los Angeles, presents the following findings:
- What are the top concerns and challenges in regards to supply chain decisions? The companies that manufacture and distribute goods and services (referred to as shippers in the study) and third-party logistics providers (3PLs). The Top 9 concerns for shippers are infrastructure; workforce readiness; economic stability; freight/supply chain transparency; lack of strategic partners/suppliers in the region; regulations/tax structure; security/crime/corruption; executive-level talent; border-crossing delays. The Top 9 concerns for 3PLs are workforce readiness; infrastructure; economic stability; freight/supply chain transparency; lack of strategic partners/suppliers in region; executive-level talent; security/crime/corruption; regulation/tax structure; border-crossing delays.
- Shifting consumer buying habits, which include a blend of in-person and online purchases of goods and services, requires quicker responses than the retail model of yesteryear. Shippers recognize the need for agility, but 42% of survey respondents said they have not made the required changes to improve their agility over the past five years. However, 51% of participants did say that they are open to new ideas, creating more opportunities for 3PLs to introduce and implement innovations.
- A key complaint among consumers who choose home or office delivery is that packages become lost more frequently. Within the last mile of the supply chain, defined as the final steps of package delivery to a person’s home or business, exists an undervalued concept known as the last yard. The majority of shippers (71%) and third-party firms (72%) recognize its influence on key retailer metrics such as consumer satisfaction and brand loyalty. Yet, only roughly a third of all survey takers agreed that companies do enough to effectively manage last yard issues.
- In any given week, consumers buy products online for home delivery or in-store pickup and also still visit physical stores to make a purchase or return. This shopping blend is known as the omni-channel. In the survey, 38% of shippers said they are inconsistent across the omni-channel and 36% noted they have no capability in this area. Supply chains are investing in integrated technologies to reverse this trend, which include enterprise resource planning software (72%); warehouse management systems (56%); transportation management networks (38%); and supply chain visibility tools (34%).
- Disruptions break even the strongest links across supply chains. When disruptions occur due to natural disasters, extreme weather or pandemics, supermarket shelves are missing key household items and products are out-of-stock online. The most common impacts, according to shipper respondents, are increased transportation and logistics costs (75%), transportation and logistics network disruptions (73%) and higher supplier costs (66%). The level of importance that companies and 3PLs place on mitigating these disruptions is greater than five years ago, with 23% of shippers and 22% of 3PLs scoring it significantly greater. The study notes that two major tools that companies and 3PL organizations can utilize to minimize disruptions are visibility tools (61% of shippers and 67% of 3PLs) and partnerships (72% and 64%, respectively). In the area of predictive analytics, 33% of 3PLs and 17% of companies are making use of these cutting-edge tools.
- Data sharing between shippers and 3PLs become increasingly important. The key to a successful 3PL-shipper relationship is the foundation-building accomplished during the request for proposal (RFP) process. It ensures that both the short-term and long-term goals of both parties are clearly understood and reasonable expectations are set in the relationship. In the study, 36% of shippers and 35% of 3PLs agreed that there are opportunities to improve the sharing of insight and data collected by the sales team with account management.
“The last mile in the world of logistics has quickly become one of the most mission-critical areas for shippers to address, as issues that occur here have major impact on brand perception, reputation and customer satisfaction,” says Ken Toombs, global head of Infosys Consulting. “A mix of enhanced data along with emerging technologies, such as artificial intelligence, can play a key role in meeting the ever-increasing demands of today’s enterprise customers.”
“When there is no capacity, those conversations change. Today, the focus is on maximizing utilization and resources, as they are becoming more limited and moving products to the end user in the most economical way,” adds Joe Carlier, senior vice president of global sales for Penske Logistics.
“The continuous transformation of the supply chain due to technology, regulations or other factors only exacerbates the talent challenges in an already tight labor market. Whether you’re looking for an innovation leader or a frontline employee, you have to think about attracting, retaining and training talent to build your workforce in a new, dynamic way,” says Meredith Moot, principal at Korn Ferry.